Hong Kong stocks drift lower eyeing more China policy support; BYD falls as Buffett cuts stake

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Policy support hopes swirl as investors track follow-up actions following a broadly positive Third Plenum

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An electronic billboard displaying the Hang Seng Index and stocks outside the Exchange Square in Central. Photo: Yik Yeung-man

Zhang Shidongin Shanghai

Published: 11:12am, 23 Jul 2024Updated: 4:27pm, 23 Jul 2024

Hong Kong stocks slid on Tuesday as investors sought clarity on Beijing’s policy support after the Communist Party’s Third Plenum expressed confidence in meeting development and growth targets by year-end, with several ministries due to release their own interpretations that would disclose more details.

The Hang Seng Index eased 0.9 per cent to 17,469.36 at the close, trading near a three-month low. The Hang Seng Tech Index fell 1.8 per cent and the Shanghai Composite Index retreated 1.7 per cent for the biggest loss in three months.

BYD and its affiliate slumped after Warren Buffett’s Berkshire Hathaway reduced its stake in the electric-vehicle (EV) maker to below 5 per cent. Meanwhile, investors snapped up high-dividend stocks including Industrial and Commercial Bank of China (ICBC) and Orient Overseas International amid the clamour for safety.

Hopes are high that Chinese policymakers will unveil more stimulus measures to bolster growth after the conclusion of the third plenary session last week. The central bank on Monday unexpectedly cut both the near-term policy rate and the loan prime rate, underscoring Beijing’s intention to step up support.

Investors are also digesting the fallout of US President Joe Biden’s exit from the November election. Despite his endorsement of vice-president Kamala Harris, former President Donald Trump still leads the polls.

“The key to a sustained run-up on the market lies in more improvements in economic data,” said Yan Zhaojun, an analyst at Zhongtai Securities. “China’s lacklustre second-quarter economic growth means that pressure is out there on downward revision to earnings. The rising odds of Trump’s returning to the White House are also adding uncertainty to the market. In this scenario, bets on high-dividend stocks are the focus of allocations.”